Dr. Donal de Buitléir:

I thank the Chairman. Evidence from the OECD shows that the distribution of income in Ireland before taxes and social transfers is the most unequal in the OECD. It is, surprisingly, perhaps a little more unequal than that in the United States.

We have the most progressive tax and transfer system in the OECD both absolutely and proportionately. As a result, the post-tax and transfer system reduces income inequality to around the OECD average. The countries with the next most progressive systems are Finland and Denmark, though these systems are considerably less progressive than ours. While the income tax system is highly progressive, the social protection system plays a very important role.

The at risk of poverty rates pre-tax and transfers is 50.3%. That was in last year's survey of income and living conditions, SILC. There was one out at 11 o'clock today which I have not had time to read so I am not sure if it has changed much in the past year. The 50.3% is reduced to 16.5% after taxes and transfers, so it is a dramatic difference.

In the case of the elderly, the State pension is very important, particularly for low income retirees who get 90% of their income from the State pension. The only source of income for 26% of these is the State pension. That is why the sustainability of the State pension is a critically important issue.

Much attention is focused on the bottom 10% of the population. This group has some puzzling features. Only 60% have medical cards compared with 74% in the third decile, that is, the third group from the bottom, and the recorded expenditure of the bottom decile is 186% of their recorded income. Their recorded income is less than thebasic supplementary welfare allowance plus child benefit, where appropriate. The result is clear. Those in the bottom decile are not in receipt of basic social welfare benefits. Possible reasons for this include that they are entitled to benefits but they are not claiming them; they are not entitled to benefits because while their income is low, they fail the means test due to their holdings of assets; they are self-employed and making very low incomes or losses during the survey period; or they are in full-time education.

One of the disturbing features in Ireland is the very high proportion of workless households. This refers to households where the adults aged up to 59 work less than 20% of their total work potential during the past year. Almost one in four Irish households, or 23.4%, are in this category. That is by far the highest in the EU and is over twice the EU average of 10.7%. Even in 2008 the number was very high at 13.7%, almost one in seven. Adults in this category disproportionately have low education, are unskilled, are lone parents or carers or have a disability. This is a complex issue and we need to increase our understanding of the barriers to work affecting this group if we are to tackle the problem. I am happy to explore these issues.